Insights on Avoiding Skyrocketing Insurance Premiums – Part 2

In our recent webinar, 10 Actions You Can Take Today to Avoid Skyrocketing Insurance Premiums, four industry professionals provided their insights to help fleets avoid increasing premiums today … and in the future.

SmartDrive spent some time with Chris Vogel, Senior Vice President, Cottingham & Butler and delved further into his recommendations. Chris leads the firm’s transportation and logistics business and is a trusted advisor to one of the largest collections of trucking accounts in the nation. Chris has extensive experience in risk financing, large deductible programs, SIR’s and played a key role in starting and managing Cottingham & Butler’s seven exclusive trucking captives.

SmartDrive: In our recent webinar, you mention that the main difference between great companies achieving better-than-average results and the average fleet muddling through, is that the great companies treat their risk management insurance program like a business. What do you mean by this?

Chris:  When it comes to their insurance renewal, a lot of people only begin to think about it 90 days out, and as a result, are subject to a process that largely fails to meet their objectives. They know they must do it each year and don’t give it much thought. As a result, many fleets end up picking their providers and partners based on a type of bingo game. Whoever comes up at the right time with the right deal is who they select. When the next year comes around, they do it all over again. There’s a better way!

Insurance is one of the top 4 to 5 expenses for most transportation companies. Because of this, people need to think about their insurance renewal differently. Take a minute and think about operating a business; think about people who are successful at anything. They immerse themselves in the process and put a laser focus on the challenge at hand. Your insurance renewal is similar and is an ongoing process that requires very intense focus and very deliberate actions throughout the year, both by you and the business partners/vendors you’re working with. Throughout the year, you should be tracking your progress, tweaking the items you control, and taking action to achieve the desired results. It’s an on-going effort that you’ve got to invest time into. When you do, it will pay dividends.

SmartDrive: You used an iceberg to illustrate the point that too many people look at their renewals and see what’s above the water. But what they need to do is focus on the much larger opportunity that lies below the water. Can you provide more insight here?

Chris: When you look at it in totality, there’s significantly more opportunity below the surface than what’s above. Most people focus on what’s in front of them and what’s easy to see, rather than trying to influence the bigger and more complicated picture, The tougher but much more rewarding path is invisible to those who aren’t willing to dive into, and one that few people are armed with the necessary tools and resources in which to unlock the opportunity. If you take action and focus on what’s below the surface, you will yield far better results than those operating under the status quo.

Dive into on the investments you have made, the processes you have enhanced, and the real results of those activities. Make sure people in your company know your story and can articulate it. It is important to understand what you’re negotiating and what your strengths and position are. Where do you stack up? What are the benchmarks? Utilize the action taken, data, and metrics that influence results to best craft your organization’s most effective approach.

It’s important to have a basis, i.e., here are my historical claims and exposures, performance data, assessment scores, technology investments, along with the markers and timeline of when you did something – and the results from your efforts. Remember – just having technology isn’t enough. It’s what you do with the tools and data that makes a difference. For instance, if you think about the data that SmartDrive provides, we know you have fleets that are getting better results than others. Why? Because they’re actively engaged in the data and the coaching. It’s not just, “I’ve got this video and I know what happened.”

SmartDrive: Another comment you made was … as years progress, the gap between price paid for insurance and the renewal rate increase a fleet experiences will continue to widen between early technology adopters and those who were more passive. Why is that?

Chris: Technology is evolving – every minute, every hour, every day. If you’re not staying up-to-date and investing in what’s available, you’ll rapidly fall behind. The companies who have adopted technology and are leveraging it are substantially ahead of their competitors and the differences in results are staggering.  And, as technology continues to evolve and companies fall farther behind in implementing it, the gap becomes wider and clearer. It’s important to point out that it’s not as simple as just having the tools. Those who are most effective are actively engaged and take action on the information they compile.

SmartDrive: You mentioned that if you’re investing in technology, it’s time to take on more risk and reap the rewards and benefits. What does that mean?

Chris: First, you must subscribe to the fact that you’re investing in tools, equipment and information that helps you mitigate or prevent accidents, while allowing you to operate safer and make better decisions with the insight/data that is made available to your organization. So, if you’ve made the investments – and are improving – why wouldn’t you bet on yourself? We have had tremendous success illustrating the expense reductions as a result of these investments and encourage leaders to leverage their efforts and take on calculated risk that ultimately will yield significantly lower cost. Strongly consider and familiarize yourself with higher deductibles, self-insurance, member-owned captive programs … whatever gives you the opportunity to take control and reap the rewards for all the investments you have made. Those fleets that have succeeded in avoiding the rising cost of insurance, have bet on themselves and continue to be rewarded for their best-in-class practices.

SmartDrive: Why do you say that insurance is a relationship business?

Chris: When an underwriter or risk taking partner looks to add your organization to their portfolio, they must believe in the leadership and culture of your organization. They are taking an incredible amount of financial risk by agreeing to protect your largest asset and there must be a significant level of trust and connection for a longstanding and mutually beneficial partnership.

We have seen the industry transition from underwriters issuing quotes on napkins to significant utilization of data and predictive modeling. Although there has been a meaningful transformation in how business is transacted, it still comes down to a partnership between people who are like-minded, understand your industry, trust each other and want to put each other in the best position to succeed. In almost every case, the person/persons most capable of best representing your company and telling your best story, are you and your executive team. Your team should know your underwriters, demand transparency and, ultimately, offer your risk-taking partner a view of the culture that they cannot appreciate from simply reviewing an underwriting file.

SmartDrive: What’s one piece of advice you’d give a fleet today to avoid skyrocketing insurance premiums?

Chris: Align yourself with great partners that possess the resources, tools and insight to position your company ahead of the curve. During the webinar, we shared a slide that showed how auto insurance costs have climbed in excess of 45% since 2011. To the contrary, we have a peer group of over 60 well- run trucking companies that have largely embraced every recommendation mentioned within the article, and have seen less than a 4% change to their cost over the same time period. To be effective in today’s environment, it’s wildly important to focus on the complex issues below the surface and take an active role in managing the dynamics within your control. This isn’t easy. A solid first step is to gain a well-founded understanding of the massive opportunity that lies below the surface and build a plan to capitalize on it.

To learn more, watch the webinar, 10 Actions You Can Take Today to Avoid Skyrocketing Insurance Premiums.

• Posted by Melissa.Senoff@smartdrive.net
• On 24 June 2020